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Greece to be closely monitored in post-bailout era

Greece’s creditors are reportedly examining a scenario whereby the country will be placed under “enhanced supervision” that will be linked to debt relief measures after its bailout ends in August, according to European Union sources.

Under the plan, any divergence – fiscal or other – will entail losses for Greece with regard to debt relief measures.

In a letter to eurozone finance ministers, Eurogroup chief Mario Centeno said the supervisory “tool” will entail three to four visits per year by representatives of the institutions to Athens, where a team from the European Commission will be permanently based.

Accordingly, Greece will not be allowed to reverse the reforms it has already approved, while it will still have to push through the prior actions that are not implemented before the bailout program ends in the summer.

The concept of “enhanced supervision” was outlined in an Commission regulation in 2013 but the team headed by the EC’s mission chief for Greece, Declan Costello, has reportedly undertaken to tailor it – in collaboration with the other institutions – to Greece’s needs.

The list of post-bailout commitments is currently being drafted, ahead of the review which begins this week.

EU sources told Kathimerini that what remains to be determined is the extent of the link between debt relief measures and Greece’s commitment to reforms – whether it will concern specific measures such as the return of 5 billion euros in central banks’ earnings from Greek bonds, or even longer-term measures like that linking Greece’s repayment of debt to its growth rate (the so-called French mechanism).

The former scenario is primarily backed by the International Monetary Fund and France, while the latter is favored by Germany.

What remains certain is that if post-bailout Greece strays off the path of reform it will either be penalized by the international markets or by its partners.

“When you are in a program you take measures in exchange for a tranche [of money]. At the end of the program, there are no available funds,” an EU source said. “There is, however, debt relief which will benefit Greece after the program. If there is a reversal on what has been agreed, Greece may lose this benefit,” the source added.